R.I.P. Performance Reviews

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R.I.P. Performance Reviews

The Idea: Accenture and Microsoft recently announced they are killing a sacred cow; they are eliminating their annual performance evaluation systems, and replacing them with a process which emphasizes more on-going feed-back and real-time coaching. New research states that organizations using a formal annual review process are actually hindering consistent performance and wasting their money. Is there a better way to drive positive results and eliminate the cumbersome, often demoralizing performance-grading systems?

One of the largest criticisms of annual performance reviews is that once per year managers finally interact with their employees, which should be a much more consistent process.  People feel as though “lump sum critiques” are not just ineffective, but demoralizing and insulting. Furthermore, only 8% of companies believe their performance review system creates real value, and 44% of employees don’t think their boss is being honest during their performance reviews.

Psychologists at various universities have recently discovered that all people (even people who love to learn), respond very poorly to receiving critical feedback in a performance review. The research also clearly showed that it is very dangerous to rank or rate people in an organization.  It creates anxiety for everyone involved in the process and often leads to inflated performance scores and a tendency to avoid difficult discussions all together.

If the goal is growth, performance reviews aren’t helping.

High-ranking or not, everyone hates performance reviews, so why do we hold on to an old practice?

Change is difficult, and there are always plenty of internal political challenges stopping a shift from annual reviews to any other system, but a new wave of monthly “check in” discussions are gaining momentum, citing positive advantages.  Instead of a critique of the past, they focus on the largest future priorities, resource needs and skill development.  Employees receive on-going coaching throughout the year, and their teammates provide feedback into their value within the team. It’s fluid and it’s hontest.

Are you getting the most out of your performance discussions?

Are you trapped in an annual system?

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